Module Title: Management Skills & Entrepreneurship
|In your role as a member of a small business advisory panel which is tasked to give support to small business start-ups,|
1. The title slides
2. The Agenda slide
3. Why New business start-ups fail Supporting Content
4. The Importance of a Sound Business Model Supporting Content
5. The Managerial Skills Required over the first 2 years of business to achieve break-even business volumes Supporting Content
6. Analyse the risks involved in this business and state the action plan
7. Sources of evidence from the literature and the local market context
1. The reason behind the failure of the new start up
Italian Baker is a Malaysian bakery chain has started their business in the year 2011 and at first due to some management problem; the company was not able to achieve the success. If a start firm will not be able to develop a strong management structure and not be able to invest sufficient money then the start up firm never, be able to achieve the success. In this case, the Italian Baker has started their business with a solid business plan but they have not the sufficient resources to transform the plan in realty so the bakery has not closed but they were not in the position to expand their business. However, after few years later in the year 2014 they have expanded their business in Indonesia. In addition to that, they have also opened the food chain in Malaysia. From the year 2013 they have started to invest more money in business and they have invested MYR120 million for which they were able to move towards growth, in order to achieve the success they have developed an automated bakery and as result of this the bakery was able to produce more bread and able to capture the market share. Therefore, by investing more money the Italian baker was able to increase the volume of their business. On the basis of the nature of the business an organization can invest money and develop the organizational and management structure (Jones and George, 2015).
Therefore, it is clear that some basic problems are there for which the start up firm like Italian baker will fails in the first stage and the reasons will be discussed:
1. The authority of the organization will not be able to find the investor because no investors and financers are not be interested to invest in a start firms.
2. In order to release the product a start form must choose a proper time otherwise they may not be able to gain the profit. For example, the Italian baker has started their business in a off season. If they have started their business in a special occasion, they can be able to attract more customers for which they would be able to move towards growth.
3. Resources are the main problem to start up forms and due to lack of resources; they will not be able to achieve the success in most of the time.
4. Due to insufficient resources, a start up firm may not be flexible in production. For example, at first the Italian bakerhas produces the bread only they were unable to produce verities of product but after moving towards growth they were able to produce different kinds of consumer goods like bread, cake, drinks and so on (Hatten, 2015).
From these reasons, it is clear, the start up firms need more investment and a proper organizational and management structure in order to achieve the success within a stipulated time period.
2. The importance of a sound business model
In order to achieve the success a proper and strong business model is required for any organization it may be for the start up firms or it may be for a developed firm. Without the business model, an organization will not be in the position to move towards growth. With the help of the business model, an organization will be able to plan how they can generate the revenues and profits within the organization (Costanzo et al. 2014). Therefore, on the basis of the business objectives and aims an organization will develop a business plan and with the help of this the authority of the organization will be able to achieve the success. Pricing and costs are the primary components of a business model for an organization. By changing the cost and price, the authority of the company will be able to change their structure, which helps them to boost their growth strategy. In case of a start up firm, this business model is also very much important because if they are able to develop a strong business model then there will no fear to fail the starts up. In the business model is proper the company also needs an efficient management structure otherwise, they will not be able to implement the business model within the business. In order to achieve the success there must be different business model and if any business model fails then another one will be implemented (Kuratko, 2016).
In case of a start up firm like Italian baker a strong business model is required without a strong business model they cannot be able to find the strong investor who will be interested to invest within the business. At the first stage of the business, a huge investment is required without the proper investment the organization will not able to move towards growth. In this case, a efficient management skill is also required otherwise they will not be able to choose a particular day to open the business or to release the products. For example, it can be said that, Italian baker at first has opened their business in an off-season and it is reason of the inefficiencies of the management team. Therefore, in order to run the business a business model is required and on the basis of the business objective if The Italian Baker was able to produce a strong business model then at the first stage they would be successful. Therefore, from the case of the Italian baker it is clear the necessity of the business model. Apart from this, with the help of the business model an organization will be able to make an effective business strategy and marketing strategy for which they can be able to achieve the success within a short period of time (Drucker, 2014). In order to enhance the performance of the business a developed company is also implement a strong business model otherwise they will not be able to achieve the higher growth rate.
In this case, the importance of the business model in case of any firm will be discussed:
Driving force of time to scale:
In order to accomplish a work within time an organization will take the help of the business model. It helps the organization to maintain the time and as result of this with a strong business model, an organization can be able to achieve the success within a stipulated time period. In case of start up firms, it also helps the company to move towards growth (Martín-Rojas et al. 2013). For example, the Italian Baker is able to achieve the success after implementing strong business model and then only they have expanded their business.
A firm with an effective business model can be able to find the strong investor who has the interest to invest in the business. Due to the strong business model, the organization will be able to earn the profit and they must achieve the success so the investors will also be able to get return from their investment easily. Therefore, in order to attract more investors the organization must develop an effective business model otherwise; they will not be able to raise the funds for their growth (Chang and Torkzadeh, 2013).
Bring the innovation:
A proper and strong business model helps a start up firm to become a developed organization by implementing the innovations, research and development. With the help of the innovation, an organization can be able to achieve the success within a stipulated time period (Zhao et al. 2015). In this case, the higher growth rate will also be achieved. For example, Italian baker has developed an automated bakery in their production process due the research and development within the business and it was possible because of their business model.
Aligning the business in a line:
Bullough et al. (2015) agree that through a proper business model, an organization can group their business and align their whole project. As a result of this they will be able to achieve the success within short period of time. In this case, by aligning the business an organization will be able to scale up their production for which they can earn higher profit from the business.
Improving the communication process:
With the help of the business model, an organization can be able to improve the communication process. In connection with that, the organization will be able to achieve the success by improving the communication process (Bae et al. 2014). In this case, the employees are connected with each other and they are communication with otters effectively, which helps the company to move towards growth.
Increase the consistency and stability:
With the help of the business model an organization can be able to achieve the success beside this the company will also be able to achieve the sustainability and consistency in the growth rate. In case of a start up firm, it may be difficult but a developed organization can be able to achieve this quite easily (Robinson and Stubberud, 2014).
Gain the comparative advantage:
Through an effective business model, an organization can be able to achieve the comparative advantage for which they can be able to earn the monopoly power in their business. Apart from this, the organization will be able to earn the maximum profit from their business. In case of a start up firm, it will be difficult to achieve but a developed firm can be able to achieve it quite easily.
An organization will be in the position to achieve the operational efficiency through an effective business model. In this case, they can be able to achieve the higher growth rate and that organization will be in the position to compete in long run. It is very much needed for the start up firm. The start firm can able to reap the harvest by achieving the operational efficiency (Gundry et al. 2014).
Therefore, it is clear that a business model is very much important aspect for an organization and by adopting a proper business model a start up firm can be able to achieve the success. In addition to that, a developed organization can also be able to achieve the growth rate for an effective business model. In this case, the marketing strategy will also be maintained by the business model and it foster the growth of any organization.
3. The managerial skills is required over the first 2 years of business to achieve the break even business volume
Do Paço et al. (2015) stated that the success of a business depends on the structure and efficiency of the management without the proper managerial skill the organization will not be able to achieve the success. In this case, there are different type of skill are there for which a manager can be able to run the firm without any problem. In order to achieve the skills lots of training and development is required. In this case, the various management skills will be discussed:
In case of a small business a manager must have the technical knowledge in order to look after technical of the organizations. Otherwise, the cost of the organization may increase. In this case, if the manager has the knowledge then they can be able to achieve the business objectives by creating pressure on the employees. It is very much essential for a start up firms.
In order to create the value within the organization the manager must have the knowledge how to handle the human capital and by which the organization can be able to develop an efficient labour force. In connection with that, the organization will be able to achieve the higher growth rate. Therefore, by enhancing the human skills of the manager an organizational authority will be able to move towards growth.
A manager of an organization must plan the business objectives in order to achieve the success and the manager must develop the business plan for which the start up firm like Italian baker will be able to sustain in the market in long run (Leyden et al. 2014). Therefore, the manager must have the potentiality to develop an effective plan otherwise, a start up firm never be able to become a developed one.
In order to become an efficient manager a person must have the capacity to direct the employees. Without this power, a manger will not be able to boost the growth strategy of the firm. In case of a start up firm like Italian baker must appoint a manger who has the power to direct otherwise the Italian Baker will not able to become a developed organization. In addition to that, with the power of direction a manger will be able to influence the employees in order to deliver a qualitative work (Benson et al. 2014).
In order to achieve the development an organization must appoint a manager who has the potentiality to control the organization and with the help of this power the manager will be able to motivate the employees and the manager can be able to create value within the organization. As a result of this, the company will be able to achieve the growth rate will be able to become a developed one.
A creative manager will be able to develop a business plan that helps the organization to achieve the success within a short period of time. In this case, the creativity and the technical knowledge are required otherwise; the manager will not be able to help the organization. In this case, an efficient manager and their skill will help the organization to communicate with the employees and the managerial skill will help the organization to implement the effective communication process within the company. In addition to that, with the help of the creativity skill the manager will also be able to implement the interpersonal communication process that makes the worker more valuable (Gundry et al. 2014).
Expanding the business:
With the help of the managerial skill, the organization will be able to expand their business. Their knowledge and management skill help the company to foster the growth by creating values and in addition to that, they will be able to influence and motivate the employees (Benson et al. 2014).
Without the management skill, an organization can fails to achieve the growth. In this case, a skilled manger will be able to care the organization but without the managerial skill, the manager will not be in position plan the business objectives for which the company cannot be able to move towards the growth.
The managerial skills are essential for each and every organization. The managerial skills within the organization enable the managers to manage others in an effective manner. The manager’s skills which the managers must follows such as:
Motivation: The managerial skills are important in order to motivate the employees within the organization. The motivation will help the employees to increase flow of their work which is essential for the development and growth of the organization. Some of the managerial skills which will help the employees
To take the ownership of the project
To create an energetic and highly motivated workplace
To support the other employees who are under stress
Problem solving: The managerial skill is important for problem solving within the organization. The right skills will helps the managers of the organization to identify, face , and overcome various problems which arises within the workplace.
Professionalism: Each and every employee within the organization must hold good standard and maintains professionalism within the organization. Integrity professionalism and honesty which are important skills every manager should have. Managerial skills will help the managers of the organization to provide exceptional service to their customers with professional attitude. It will also help them to identify diplomatic solutions for workplace issues.
Communication: The managers of an organization must maintain an effective communications within the organization. The effective communication will leads to the growth and success of the organization. Effective communication will also help the managers to motivate their employees to perform in a better way. The best managers ‘within the organization always sent clear message to their employees and share valuable and understandable information which will be helpful to get the job done. The mangers of an organization need to draft clear training materials to their employees. Effective communication needs to be maintained with the co workers within the organization.
Technical skills: The managerial skills are important to maintain technical skills of the managers within the organization. Technical skills are the knowledge and capabilities which are used to perform specialized tasks. The management of an organization needs to have the technical skills in order to maintain effective communications between the workers.
Innovations: The managerial skills will help the managers of the organization to enhance their innovative ideas or methods. Developing new ideas will help the organization to innovate new products, which will help for the development and growth of an organization.
4. Analyze the risks involved in this business and state the action plan
The Business risk is the possibility that the organization will have lower profit or experience loss rather than making a profit. The risk in business is influenced by several factors, which include sales, volume, input cost, and competition over the market, the overall economic situation and rules and regulations of the government (Benson et al. 2014). The business risk is categorized into five main types.
Strategic risk: is a kind of risk, which is incorporated, with the operations of the particular organization. Strategic risks which mainly arise from the environment of the business, which include buyers and sellers interacting in order to buy or sell the goods services within the market.
Financial risk: Financial risk is the risks, which are related to the transaction and financial structure within the organization.
Operational risks: Operation risk is the risk, which is integrated with the administrative and operational system of a particular organization.
Compliance risks or legal risk:
The organization must mitigate these risks by obeying the rules and regulations of the government.
Other risks: The various others risks which the origination has to face such as natural disaster, floods, which mainly depends on the nature.
The actions plan needs to be followed by Italian baker in order to reduce the risks.
The leaders and managers of the organization needs to monitor the various activities involves within the organization in order to maintain the development and growth of the organization. The financial risks of the business need to be properly monitored in order to reduce loss in business organization. The organization needs to develop a solid plan to reduce the financial risks of the business. Organization needs to implement customer’s service reviews of your products or services before offering them on a wider scale (Gundry et al. 2014). The organization also needs to have test group or beta test so that the company can improve before the real launch within the market and reduce their financial risks. The organization must maintain the proper record system in for reducing the financial risks. However, in order to reduce the legal risks the organization needs to buy various insurance policies, create effective plans and watch the contract terms of the organization. The employees of the organization need to train properly and monitor them to minimize risks within the business.
5. Sources of evidence from the literature and the local market context
Transformation of the business and innovation of the products are the fundamental for the survival in the challenging economic situations. These are the two factors, which enable the organization to reform their various strategies and shift according to the dynamic change in the market. The Italian baker was inaugurated in Malaysia on March 21, 2007. It produces the sandwich loaf, cakes and cream rolls within the Malaysian market. The products are marketed under the brand name of Massimo. As per the recent survey, it has been observed that Selangor that produces around 16,000 loaves of bread and 24,000 buns daily are transported to west Malaysia. The people of Malaysia like the tradition techniques used by the organization to bake the products. The aim of the organization is to expand in Indonesia with its plan of producing 10,000 loaves and 20,000 buns per day. The products produced by the Italian baker are quite familiar by the locals due to their simple recipe for wholesome bread baked with Italian passion. The recipe also found their way into the hearts and homes of the Malaysian across the nation. As per the earlier history, the bakery was always known for their high quality of bread, which are baked with unmistakable Italian passion (Robinson and Stubberud, 2014).